FCC staff recommends conditional approval of News Corp. purchase of DirecTV

Wednesday, December 3rd 2003, 12:00 am
By: News On 6

WASHINGTON (AP) _ News Corp.'s proposed takeover of DirecTV, the nation's largest satellite television provider, should be approved by the Federal Communications Commission with certain conditions, the FCC's staff recommended after studying the deal.

An FCC official, speaking on condition of anonymity Wednesday, said the staff backed the $6.6 billion deal if DirecTV more quickly offers local over-the-air broadcast channels to its customers, and if an arbitration mechanism is set up to handle disputes between News Corp.'s Fox broadcasting arm and cable television companies.

The arbitration is designed to alleviate concerns Fox will pull its network programming off cable systems to encourage viewers to subscribe to DirecTV, the official said. Among that programming is the National Football League and major league baseball.

In May 2002, a dispute over how much Time Warner should pay for the Walt Disney Co.'s cable channels led to Disney's ABC network being removed from Time Warner cable systems in New York and six other cities. In January, some 400,000 Cox Communications customers in the Washington, D.C., area, Cleveland, Dallas and Houston lost the Fox network for a week in a dispute over whether the cable company should also carry two Fox cable channels.

The staff recommendation now goes to the five-member FCC, which will make a final decision, likely this month.

Under the deal announced in April, News Corp. would acquire 34 percent of DirecTV parent Hughes Electronics, a subsidiary of General Motors Corp. The deal would give News Corp. the largest block of shares in Hughes and controlling interest in DirecTV, which has more than 11 million subscribers.

Some consumer groups have opposed the deal, as have several cable companies, arguing the media consolidation is anti-competitive and threatens to further drive up the price of pay television.

News Corp. Chairman Rupert Murdoch has said the acquisition would not harm competition or limit consumer choices. He said the merger will improve DirecTV, providing consumers with more local TV stations and better high-speed Internet access.

The FCC last year rejected a proposed merger between DirecTV and its chief competitor, EchoStar Communications Corp., ruling it would unfairly limit consumer choices.